The formation energy of different ensembles on Pd(111) surfaces containing N (N=1-4) Au atoms were investigated using a density functional theory model. The best model for exploring the adsorption of thiophene was selected, and the mechanism of competitive hydrodesulfurization on a Au/Pd(111) bimetallic surface was investigated. The results showed that Au/Pd(111) has the lowest formation energy, and adsorption at the hexagonal close-packed site is most stable when the thiophene plane is tilted at 30° to the Au/Pd(111) bimetallic surface with S atom. The reactions are exothermic, and desulfurization can be either direct or indirect. The direct desulfurization pathway has a low activation energy, but it is difficult to control the products. The indirect desulfurization pathway is the best fit for the cis-hydrogenation process; C―S cleavage has the highest reaction energy barrier, and is the rate-determining step. The activation energy barrier of the rate-determining step on Au/Pd(111) is lower than those on Au(111) and Pd(111). This indicates that bimetallic AuPd is more active than single Au and Pd in the hydrodesulfurization of thiophene.